All Forum Posts by: Ankit Duggal

Simple Metrics for Northward are as follows:

$60-70,000 a unit renovated
$30-45,000 a unit distressed

I have invested over a million dollars into assets over the last few years into Newark. Newark is urban so blocks really matter even in Northward so the best advice that I can give is study the market and complete a feasibility study that matches your investment thesis.

Ankit

Gerald Gatyas it depends on what is optimal cash flow?

Jersey is really tough for a rule of thumb. You can utilize the 2% rule but you wont find a ton of projects. It really depends on your return on equity requirements.

Ibrahim

That is a great break apart of the wards. Spoken like a true Newarker. The only thing that I would add is that within each ward individual sub-sections are good and bad. That is what make Newark a highly interesting market to play in.

Ibrahim S Great points.
Sant Sobhraj You can also just run a eviction search with a firm like Corelogic to get the eviction records of tenants when you are conducting due diligence on the asset. Or you can use the civil records to see how many times the landlord has been in landlord-tenant court

Sant Sobhraj You need to be asking for a cap rate closer to 13-14 if you are in the central/south ward.

Ankit

Sant Sobhraj

It really depends where in Newark you are buying as that is unique market in its own right.

Just a couple points of concern:
Expenses are only 25% of gross income. That ratio feels low.
Key question to ask would be how many times have you had to file notice of eviction to get paid?
If none is section 8 then how long have the tenants been living there and what is the property manager underwriting process.

Ankit

@MikeThomas

1) If taxes are an issue, buy it under the $1million mark to avoid Jersey Millionaire Tax for yourself and then structure the remaining as an installment sales contract

2) Appreciation: report relating to the Hoboken is as follows:
http://www.hudsonrealtygroup.com/files/hrg_downloads/Market%20Reports/HRG_METRO_NJ_Market_Report_2H_2012_Hoboken_Jersey_City_Real_Estate.pdf

Dan Crenshaw my recommendation would be to wait if you want to get the asset by yourself. If you want the asset then syndicate the deal or utilize seller financing to work out the trade.

Doryal P. Jumping a little late on this one There are two problems with this asset:
1).You are trying to market a single family asset in an urban market. You are in the seven oaks neighborhood of Orange, and I get that. The issue as J Scott, Will, and others pointed out is the rehab or the ARV numbers. In your case the ARV numbers is aggressive. Here is why:
a. There have been 17 total sales in that market since 1/1/2013 and only 4 sales have been above $150,000. Of those 4, only 1 has been above $200,000.
b. You have 17 assets for sale that are not short sales and the ones above $200,000 have been sitting for more than 180 days. That is really concerning if you are pushing this project to a flip investor who is most likely your target end buyer.
2) The $30,000 is not realistic on a 6 bedroom house. I have done rehabs in the Jersey market, and a basic cosmetic job on a 3 bedroom house may run me $30,000.

I would suggest lowering your ARV number to $199,000 and then adjust the buy side asking price. Now you may have a product that a rehabber may consider.

Happy Investing